Exam Simulator
The old insurer
When an employee or dependent who is currently receiving benefits qualifies for an extension of benefits due to a discontinuance which was followed by a replacement, which of the following is responsible for that disabled person's continuance of benefits?
Transfer
When an individual purchases insurance, what risk management technique is he or she practicing?
Outstanding loans and interest
When calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value?
Depreciation period
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
They earn lower interest rates than fixed annuities.
Which of the following is NOT true regarding Equity Indexed Annuities?
It would not occur in a deferred annuity.
Which of the following is NOT true regarding the accumulation period of an annuity?
Creditor is the policyowner.
Which of the following is TRUE about credit life insurance?
It has a tax benefit for both employer and employee.
Which of the following is TRUE of a qualified plan?
It may last for the lifetime of the annuitant.
Which of the following is TRUE regarding the annuity period?
Variable whole life has a guaranteed death benefit.
Which of the following is a key distinction between variable whole life and variable universal life products?
Pay-in period
Which of the following is another term for the accumulation period of an annuity?
Driving recklessly
Which of the following is considered to be a morale hazard?
Premiums are not tax deductible as a business expense.
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
To create an estate
Which of the following is the best reason to purchase life insurance rather than annuities?
If it's returned during the free look period, the agreement will be void.
Which of the following is true regarding a policy with a face value less than $10,000?
Dividends are not taxable.
Which of the following is true regarding taxation of dividends in participating policies?
Payor Benefit Rider
Which of the following riders would NOT cause the Death Benefit to increase?
They can be changed only with the written consent of that beneficiary.
Which of the following statements is TRUE concerning irrevocable beneficiaries?
It will pay double or triple the face amount.
Which of the following statements is TRUE concerning the Accidental Death Rider?
They are usually qualified plans.
Which of the following statements regarding deferred compensation funds is INCORRECT?
They are a refund of unearned premiums.
Which of the following statements regarding policy dividends is true?
)California Financial Information Privacy Act
Which of the following was designed to provide more extensive privacy protection than the federal Gramm-Leach-Bliley Act
$100,000
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
Moral hazard.
An individual's tendency to be dishonest would be indicative of a
Single premium whole life.
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Consideration.
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
$30,000
An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty?
Rescission of a contract.
An intentional or unintentional concealment entitles the affected party to which of the following?
Not subject to income taxation by the Federal Government.
Death benefits payable to a beneficiary under a life insurance policy are generally
Value funds.
During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT
A level annual premium for the life of the insured
A Straight Life policy has what type of premium?
Insurance.
A contract which one party undertakes to indemnify another against loss is called
Cost of Living Rider
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?
Morale
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?
Specified.
All of the following are beneficiary designations EXCEPT
a)Paid-up additions. b)Fixed-period installments. c)Accumulated at interest d)Reduction of premium. B FIXED PERIOD INSTALLMENTS
All of the following are dividend options EXCEPT
Premiums.
All of the following are examples of risk retention EXCEPT
Diagnosis must indicate that death is expected within 3 years.
All of the following are features and requirements of the Living Needs Rider EXCEPT
Buy-sell agreement.
All of the following are personal uses of life insurance EXCEPT
The Guaranty Association.
All of the following entities regulate variable life policies EXCEPT
Hazards.
Events or conditions that increase the chances of an insured loss occurring are referred to as
Semiannually
Every long-term care insurer in California must submit to the Commissioner a list of all agents or other insurer representatives authorized to solicit individual consumers for the sale of long-term care insurance. These submitted agent lists must be updated at least
Reduction
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?
8 hours each reporting period.
For senior agents, the requirement for continuing education for California Partnership for long-term care policies is
The uncertainty or chance of loss.
For the purpose of insurance, risk is defined as
A separate account.
For variable products, underlying assets must be kept in
They are not included as income for the employee, but are taxable upon distribution.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
24
How many hours of continuing education must agents complete each licensing term
Joint life annuity.
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
With the policy.
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than
IT is approved by the IRS.
If a retirement plan or annuity is "qualified," this means
Securities
If an agent wishes to sell variable life policies, what license must the agent obtain?
Upon the last death
In a survivorship life policy, when does the insurer pay the death benefit?
Unilateral
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?
An applicant submits an application to the insurer.
In insurance, an offer is usually made when
A bill must be approved by both houses of the California legislature.
In order for the California Insurance Code to be changed in any way, what is required?
General election, for no more than two four-year terms
In the state of California, who selects the Insurance Commissioner and for how long?
The loss may be intentional.
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT
Protecting the insurer against adverse selection.
Profitable distribution of exposures serves the purpose of
Annually Renewable Term
The LEAST expensive first-year premium is found in which of the following policies?
Return to the applicant for completion
The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application?
An index like Standard & Poor's 500.
The minimum interest rate on an equity indexed annuity is often based on
The annuitant must be a natural person.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
Conditional
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
A presentation of nonguaranteed elements of a policy.
The term "illustration" in a life insurance policy refers to
Credit life.
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called
They can convert their coverage to permanent life insurance without evidence of insurability.
When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy?
The beneficiary must have insurable interest in the insured.
Which is NOT true about beneficiary designations?
Law of large numbers
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Extended Term
Which nonforfeiture option has the highest amount of insurance protection?
Reduced paid-up
Which nonforfeiture option provides coverage for the longest period of time?
vanishing premium information
Which of the following CANNOT be included along with illustrations used to sell life insurance?
Domestic
Which of the following best describes an insurance company that has been formed under the laws of this state?
Distribution of excess funds
Which of the following best describes what policy dividends are?
The amount of premium payment
Which of the following information will be stated in the consideration clause of a life insurance policy?
Third-party ownership
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?
Insureds who are 60 years of age or older
Which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery?
Need is predicted using the number of years until the insured's retirement.
Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?
The employer is the owner and beneficiary.
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
3 days
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
To delegate the power to approve a settlement.
ccording to the California Insurance Code, all of the following are general powers and duties of the Commissioner of insurance EXCEPT
Guaranteed insurability rider.
f a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Express authority.
the authority granted to an agent through the agent's contract is referred to as
Insurer.
When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the
Grace period.
The automatic premium loan provision is activated at the end of the
The benefit is received tax free.
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
Immediate
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
Automatic premium loan
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Pure risk.
A situation in which a person can only lose or have no change represents
A peril
A tornado that destroys property would be an example of which of the following?
a)They must identify nonguaranteed values .b)They must differentiate between guaranteed and projected amounts. c)They must be part of the contract. d)They may only be used as approved. C THEY MUST BE PART OF THE CONTRACT
All of the following are requirements for life insurance illustrations EXCEPT
It is a life contingency option.
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
30 days
Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees?
coverage ends and the policy cannot be reinstated.
What happens when a policy is surrendered for its cash value?
Tort
What is a wrongful act or the violation of someone's rights that leads to legal liability called?
50%
What is the penalty for IRA distributions that are below the required minimum for the year?
6%
What is the penalty for excessive contributions to an IRA?
To lessen the risk of financial loss because of the death of a key employee
What is the purpose of key person insurance?
Direct-response
What is the term for a sales campaign conducted through the mail?
6 months
What is the waiting period on a Waiver of Premium rider in life insurance policies?
100%
What percentage of a company's employees must take part in a noncontributory group life plan?
TRUST
What type of account will most likely be established for a minor?
One-year term option.
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
SEC registration.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
The same face amount as in the whole life policy.
Under an extended term nonforfeiture option, the policy cash value is converted to
Homogeneous.
Units with the same or similar exposure to loss are referred to as
Profitable distribution of exposures
What describes a situation when poor risks are balanced with preferred risks, and average risks are in the middle?
Cash values can be borrowed at any time.
What does "liquidity" refer to in a life insurance policy?